Dongfang Shenghong Turned into Profit in 2025 POE Landing to Open New Material Harvester Period

Refining gross margin surged 9.27 percentage points

In terms of sectors, the petrochemical and chemical new materials business achieved revenue of 99.472 billion billion yuan, down 8.13 percent from the same period last year, accounting to 79.21 percent of the total revenue, while the chemical fiber business achieved revenue of 23.957 billion billion yuan, down 11.76 percent from the same period last year. In terms of product structure, the main product lines show significant differentiation:

The annual revenue of refined oil items was 27.087 billion billion yuan, down only 2.76 percent from the same period last year, however the gross profit margin reached 31.01 percent, up 9.27 percentage points from the same period last year. The core driver of the significant increase in profitability in the refining sector is: international oil prices fluctuated downward in 2025, Brent crude oil showed a month-on-month decline throughout the year, from $78.35/barrel at the beginning of the year to $61.63/barrel in December, and the downward shift in the oil price pivot brought significant benefits to the company's cost side. At the same time, the domestic refined oil cracking spread is greater stable, the company's refined oil sector gross margin prolonged maintenance of greater than 20%, profit through the cycle.

In terms of production capacity, Shenghong Refining and Chemical is one of the three major private refining and chemical companies in China, with the largest single set of atmospheric and vacuum distillation unit of 16 million tons/year in China, the largest single series of p-xylene unit in the world, and the largest domestic continuous reforming unit of 3 × 3.1 million tons/year in total. 3.2 million tons/year boiling bed residue hydrogenation, 3.2 million tons/year diesel hydrocracking, 2.8 million tons/year PX, 4 × 150000 tons/year sulfur recovery and other units are among the top domestic scale. The extensive process equipment brings the advantages of improved equipment efficiency and thorough energy utilization, further strengthening the cost competitiveness.

Revenue from other petrochemical and chemical new materials was 72.385 billion billion yuan, down 9.99 percent from the same period last year, while gross profit margin was only 4.46 percent, up 0.41 percentage points from the same period last year, and profit improvement was limited. Polyester yarn revenue was 22.893 billion yuan, down 12.12 percent from the same period last year, and gross profit margin was 6.12 percent, down 0.70 percentage points from the same period last year.

In the PTA sector, the sector-wide oversupply pressure continues, the company's PTA product gross margin of -1.40, still in a loss state. The overall gross margin of the polyester chemical fiber business was 5.55.

From the perspective of profit condition, as the turnaround mainly relies on non-recurring gains and losses such as government subsidies and asset disposal income, the net profit after deduction is still a loss, and the profitability of the main business still needs to be repaired.

Intensive production of new materials

2025 is the key year to the company's new energy and new materials strategy to focus on cash. Sirbon Petrochemical has 2.4 million tons/year MTO unit (in terms of methanol), which is the largest single alcohol-based polygeneration unit in the world. In the first half of the year, EVA added 400000 tons of production capacity successfully put into production, the total production capacity jumped to 900000 tons/year, the production capacity scale sector-leading, photovoltaic-grade EVA product methodology reached the international cutting-edge level, the market share of the world's top, has covered many domestic photovoltaic film field head companies. In the third quarter, the 100000-ton/year POE manufacturing plant with independent intellectual property rights was successfully put into operation, making the company one of the few leading companies in China that master the independent methodology of photovoltaic-grade EVA and POE two core photovoltaic film raw materials. POE is mainly applied in high-end areas such as photovoltaic film, automobile manufacturing, polymer modification, and is an crucial strategic layout to the company to move towards a high value-added new material track.

Acrylonitrile production capacity of 1.04 million tons/year, ranking first in the country, the downstream is broadly applied in ABS, carbon fiber, nylon 66 and other high-end materials, the company has have become the main raw material suppliers of many domestic mainstream carbon fiber companies. MMA has a production capacity of 340000 tons/year, which is also in the leading position in the sector.

In the polyester chemical fiber plate, the company has a polyester filament production capacity of about 3.6 million tons/year, the differentiation rate of greater than 90%, mainly high-end items DTY, is the world's leading full-extinction series fiber manufacturers and fine-denier differentiated fiber manufacturers. The company also has complete independent intellectual property rights, the world's leading bio-based PDO monomer, PTT fiber, as well as carbon capture fiber and recycled polyester fiber sector chain. The production capacity of recycled polyester fiber is about 600000 tons/year, ranking in the forefront of the global sector. The company took the lead in putting into production a self-developed melt direct spinning production line from discarded materials plastic bottles to spinning, realizing the recycling of discarded materials plastics and efficiently reducing production costs.

International layout steadily advancing

The company's product sales are mainly in the domestic market, with domestic revenue accounting to 94.64 percent in 2025. The proportion of overseas revenue increased compared with the same period last year, with overseas revenue accounting to 5.66 per cent in the first half of the year. With the continuous expansion of trade channels and the rising research of emerging markets such as Mexico, the scale of export sales is expected to continue to expand.

Capital expenditure comes to an end, first-quarter net profit soars.

In 2025, the company's super-substantial refining integration project construction has been basically completed. The extensive capital expenditure cycle since 2022 has entered the final stage. Honggang Petrochemical's 2.4 million-ton PTA Phase III project will be put into operation in Q3 in 2025, using the sector's most cutting-edge P8 ++ methodology. In the future, capital expenditure will show a downward direction year by year, and the positive effect of operating cash flow is expected to be gradually released. Looking ahead to 2026, the "anti-roll" policy continues to advance, most petrochemical items production capacity development slowed down significantly, the PX sector chain supply and demand contradiction is expected to expand, to refining companies to contribute significant profit elasticity.

From the perspective of the first quarter of 2026, the company has achieved a strong start: operating income in the first quarter was 32.022 billion yuan, an increase of 5.65 percent over the same period last year; net profit attributable to the parent company was 1.432 billion yuan, a sharp increase of 319.86 percent over the same period last year; and non-net profit was 1.316 billion yuan, a sharp increase of 349.52 percent over the same period last year. The core driving forces to the sharp rebound in performance are: first, the prosperity of the refining and chemical sector has continued to rebound, and the price difference between refining and chemical items has been significantly repaired; Second, the production capacity of new materials such as EVA and POE has been fully released, and high value-added items have contributed incremental profits. Third, the company continued to deepen cost reduction and efficiency increase by optimizing the operation of the device, and the thorough gross profit margin increased significantly year on year.

Looking forward to 2026, the company will focus on two strategic directions: first, continue to deepen the "1 + N" manufacturing pattern, focus on new energy materials, high-performance new materials and low-carbon environmentally friendly industries, enhance the matrix of core items such as photovoltaic film materials, new energy solvents, high-end polyolefins and high-performance fibers, and accelerate the conversion of new and old kinetic energy; The second is to comprehensively promote the deep empowerment of AI and actively promote the construction of intelligent body consumption platform, accelerate the landing of the "digital staff" system, deeply integrate AI methodology into core scenarios such as production optimization, automatic manage, equipment regulation, security early warning, etc., and achieve a double breakthrough in cost reduction and efficiency enhancement and model innovation. Driven by the continuous promotion of the refining "anti-roll" policy and the centralized discharge of new material production capacity, the company is expected to start a new round of high-condition research cycle.